• EUR/USD remained in a familiar trading range and seesawed between tepid gain/minor losses on Tuesday.
  • Concerns over rising coronavirus cases benefitted the safe-haven USD and kept a lid on the attempted recovery.
  • Investors now look forward to the final Eurozone PMI, US macro data and FOMC meeting minutes for a fresh impetus.

The EUR/USD pair had some good two-way price moves on Tuesday and was exclusively driven by the US dollar price dynamics. Despite upbeat Chinese PMI data, concerns over surging coronavirus cases around the world continued weighing on investors' sentiment. This, in turn, drove some haven flows towards the greenback and exerted some pressure on the major. The shared currency failed to benefit from hotter-than-expected Eurozone consumer inflation figures for June. According to the preliminary estimates, the headline Eurozone CPI rose 0.3% YoY during the reported month vs 0.1% expected and previous. The core CPI (excluding food and energy costs) matched estimates and edged lower to 0.8% YoY rate from 0.9% previous.

The pair dropped to three-day lows, albeit once again showed some resilience below the 1.1200 round-figure mark. The USD struggled to capitalize on its intraday positive move, instead witnessed some selling during the second half of the day and assisted the pair to stage a goodish intraday bounce of around 70 pips. The USD bulls seemed rather unimpressed by Tuesday's mixed US macro data, showing that the Chicago PMI edged higher to 36.6 in June. The reading marked a further recovery from 32.3 recorded in May but fell short of consensus estimates pointing a rise to 45. Separately, the Conference Board's Consumer Index jumped to 98.1 in June from the previous month's downwardly revised reading of 85.9.

This coupled with a recovery in the US equity markets further dented the greenback's relative safe-haven status and remained supportive of the pair's attempted recovery. The pair, however, lacked any strong follow-through below mid-1.1200s and finally settled around 30 pips off daily tops. The pullback extended through the Asian session on Wednesday as market participants now look forward to the final Eurozone PMI prints for a fresh impetus. Meanwhile, the US economic docket highlights the release of the ADP report on private-sector employment and ISM Manufacturing PMI. Later during the US session, the minutes of the latest FOMC monetary policy meeting will further influence the USD price dynamics and produce some meaningful trading opportunities ahead of Thursday's release of the closely-watched US monthly jobs report.

Short-term technical outlook

From a technical bias, the recent range-bound trading action makes it prudent to wait for a sustained break in either direction before positioning for the pair’s near-term trajectory. A convincing breakthrough the 1.1200-1.1190 region might be seen as a fresh trigger for bearish traders and turn the pair vulnerable to accelerate the fall towards the 1.1100 round-figure mark. The momentum could further get extended and the pair might the aim to test the very important 200-day SMA, currently near the 1.1035-30 region.

On the flip side, the 1.1250-60 region now seems to have emerged as an immediate resistance, above which the pair is likely to make an attempt to reclaim the 1.1300 round-figure mark. Some follow-through buying has the potential to lift the pair further toward the double-top resistance near the 1.1350 supply zone. A sustained strength beyond will negate any near-term bearish bias and prompt some near-term short-covering move, which should assist the pair to surpass the 1.1400 level. This, in turn, will set the stage for a move back towards testing YTD tops, just ahead of the key 1.1500 psychological mark.

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